$200 million award against Microsoft

Microsoft was told to pay $200 million to a Canadian company over a patented way to process electronic documents in Microsoft's Word products.

A federal jury in Tyler, Texas, found Microsoft infringed a patent owned by closely held i4i.

The award is the amount sought by the Toronto company, which claimed the Redmond software company willfully used the patent.

The judge can increase the damage award based on the willfulness finding, and i4i can seek a court order blocking further use of its invention.

Microsoft said it would fight the verdict.

"We believe the evidence clearly demonstrated that we do not infringe and that the i4i patent is invalid," said Microsoft spokesman David Bowermaster. "We believe this award of damages is legally and factually unsupported, so we will ask the court to overturn the verdict."

It's the fourth-largest jury verdict in the U.S. so far in 2009, according to data compiled by Bloomberg. It's also the second-largest patent jury award this year, behind a $388 million verdict against Microsoft won by a Singapore company in April.

The $200 million equals about four days of profit for the company, based on fiscal second-quarter net income of $4.17 billion on sales of $16.6 billion.

The i4i dispute is over a method of processing electronic documents using embedded codes that provide instructions on how information appears.

Word 2003 and 2007 use "extensible markup language," or XML, for encoding, and customize the XML in a way that closely held i4i contends infringes its patent.

Both sides agree that many people use Word without ever using custom XML.

"E-mails from Microsoft show they knew about the patent and infringed to make i4i products obsolete," said i4i lawyer Douglas Cawley.

Microsoft argued it didn't use i4i's technology and sought to invalidate the patent.